Why Should You Get an Endowment Plan?

Building up a kitty of funds that can be used to deal with any kind of emergency is important. And this requires disciplined saving and investment. The life insurance companies in India offer a variety of savings plans online as well as offline that offer individuals an opportunity to save and create a corpus for the future. The choice of a savings plan depends on several factors including your age, your risk-bearing capacity and the goal that you wish to fulfil. If you are young, you can easily go for savings plans that offer lucrative returns but carry higher risks. However, if you are investing in the later stages of your life and looking for steady and guaranteed returns, you should go for investment in endowment or money-back policies. Let us find out what is an endowment plan and why should you go for it.

What are Endowment Plans?

Endowment plans offers guaranteed returns. These schemes provide you with a disciplined route to invest your savings for the achievement of your long-term goals. These plans come with a maturity benefit that can be used to fulfil your various financial goals like funding your child’s education, buying a house, or leading a financially secure retired life. Since these plans also offer life insurance, the beneficiaries receive a death benefit in case something happens to the policy holder. You can use a savings plan calculator to decide the duration and the amount to be invested to fulfil a particular financial goal.

Reasons to Get an Endowment Plan

Endowment plans are the most popular type of life insurance plans since they offer the dual benefit of insurance cover and a route to invest your savings. Let us look at some reasons to buy an endowment plan:

  • Life Cover– If you are looking to secure the financial future of your loved ones in case something happens to you, a life insurance policy is a must. And an endowment plan offers you both life cover as well as a savings plan.
  • Guaranteed Returns– An endowment plan policyholder is assured of getting the maturity amount once the policy duration is over. Some companies even offer savings plans wherein the policyholder has to pay the premiums for a limited duration. These plans also have provisions for payment of death benefits.
  • Consistent Savings-When you buy an endowment plan, you have to pay regular premiums which inculcates a habit of regularly saving a part of your income.
  • Tax Benefits– Investments in life insurance policies including endowment plans are eligible for tax benefits under Section 80C.  Some saving plans are also eligible for tax benefits under Section 10(10D) on maturity proceeds.
  • Liquidity– If you are looking for some additional liquidity from your savings plan, you should opt for money-back policies that involve regular payouts of a certain percentage of the maturity amount at specific intervals. However, endowment policies do not have such provisions and the pay out is at maturity only. Some plans may have provisions for loans against the assured amount.
  • Riders– Several endowment plans offer investors an option to buy additional riders for critical illness, total permanent disability, and accidental death. This means you can get extensive coverage for life as well as critical illnesses.

To conclude, investment in guaranteed plans can help you fulfil your financial goals. Endowment plans offer guaranteed maturity benefits plus bonuses besides offering life cover with add-on riders to provide extensive coverage. If you wish to invest in an endowment plan ensure that you can pay the premiums regularly.

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